Meta Platforms (NASDAQ:FB) is facing a slew of challenges. It’s shifting focus to the metaverse, its recent earnings numbers suggests its user base may have hit a peak, and there are also antitrust challenges still out there, involving Instagram and WhatsApp, which may lead to their breakup from the tech giant.
Amid all these concerns, the stock has crashed more than 37% to start 2022. Although the S&P 500 hasn’t exactly been soaring, its losses are much more tame, declining by 8% over the same period. Now, with the drop in price, Meta is trading at a forward price-to-earnings multiple of 17 – normally that multiple is comfortably over 20. Tech stocks Alphabet (NASDAQ:GOOG) and Netflix (NASDAQ:NFLX), trade at 23 and 35 times their future profits, respectively.
Although there is risk around Meta’s business, this is still a company that reported $118 billion in revenue last year and that regularly nets more than 30% of its top line as a profit. As of the end of 2021, Meta also had just under $48 billion in cash, giving it plenty of resources at its disposal to either invest in its own business or acquire another one, to give it another opportunity to expand.
Meta may seem like a risky stock to own right now, but the business itself remains strong and incredibly profitable. It recently hit a new 52-week low of just over $190, and investors shouldn’t assume it will continue falling further down. For all the risks, Meta can still be an excellent long-term buy.